[Vampyr]

Fluffy, on 2011-October-15, 03:57, said:

I travel europe 2-5 times a year, my brother lives in Ireland and comes 2-4 times a year also, I don't want to exchange money every time I travel.

Don't you use a credit card most of the time anyway? If you need cash, just use an ATM in your destination country. You would have done that at home before leaving, so it won't take any more time.

[blackshoe]

Forty years ago or so, when I got my first credit card, I found an awful lot of places didn't take them. And folks who didn't know you would be reluctant to take your check. So you pretty much had to carry cash, particularly when traveling. These days I don't do much traveling, but it seems to me a lot more places take credit cards. If I were a conspiracy theorist I would speculate that the bankers are trying to wean us off any kind of tangible "money" so they can somehow skin us some more, and suggest that Bank of America's recent announcement of a new fee for using a debit card is evidence of that.

OTOH, I well remember when I was in the Navy, we'd spend several months running around all over the place, and when we got back to home port, I inevitably ended up with at least a few dollars worth of half a dozen different currencies. Not enough to make it worth trying to exchange 'em for dollars, but enough that I would be a little unhappy it wasn't.

I would think, all things considered, that using a credit or debit card and possibly a local ATM once in a while would work pretty well in most Western countries, at least. Provided your bank doesn't charge you an arm and a leg for the privilege. I just had a terrible thought: bank charges similar to cell phone companies' "roaming" charges. Arrrgh!

[Gerardo]

blackshoe, on 2011-October-15, 11:38, said:

I would think, all things considered, that using a credit or debit card and possibly a local ATM once in a while would work pretty well in most Western countries, at least. Provided your bank doesn't charge you an arm and a leg for the privilege. I just had a terrible thought: bank charges similar to cell phone companies' "roaming" charges. Arrrgh!

Here in Argentina the biggest ATM network charges U$S 4 per transation I think.

Also saw it in Canada, but not in all banks, I think BMO.

[Vampyr]

Gerardo, on 2011-October-15, 13:49, said:

Here in Argentina the biggest ATM network charges U$S 4 per transation I think.

Also saw it in Canada, but not in all banks, I think BMO.

Then people from Argentina ATMs in their destination countries; but anyway these people are not directly affected by the Euro.

[y66]

From a story in today's paper by Steven Erlanger and Stephen Castle:

Quote

BRUSSELS — In the end, it was Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France against the European banking establishment — and the bankers blinked.

It was approaching 2 a.m. Thursday, not long before the Asian markets would open, and the two leaders were desperately trying to nail down the last component of a complex deal to save the euro: forcing the banks to pay a greater share of Greece’s effective default.

For hours, negotiators had been trying to persuade the banks to accede to a “voluntary” 50 percent loss in the face value of their Greek bond holdings. The banks, which had already agreed to a 21 percent write-down, had dug in their heels.

They knew how badly the European leaders needed a deal, and how much financial experts feared a disorderly, involuntary default. That could set off a “credit event,” throwing world financial markets into turmoil, much as the collapse of Lehman Brothers did in the fall of 2008.

But Mrs. Merkel called the bankers’ bluff, said officials present at the discussions. Accept the 50 percent write-down, she told the bankers, or bear the consequences of default. In effect, she was willing to risk a credit event, and to place the blame for any fallout on them.

The European success sent the markets soaring and laid out the path to a more comprehensive solution to the euro crisis, though the plan faces hurdles.

Nice call.

[Free]

It's a complete joke. People in charge don't have any feeling of responsability, no long term vision, they keep spending money they don't have for all kinds of social structures. Don't get me wrong, some people really need help, but governments throw money out of the window so that an enormous amount of people can abuse the system. These people are obviously needed for their votes, whatever the cost.

Oh, and when there are problems, our ministers aren't even made accountable for anything. Noooo, the working population has to pay even more to temporarily "save" some other country for the 20th time. Who's next? Spain, Portugal, Italy, after these have been "saved" next in line will definitely be Belgium and France. We can't save them all, that's for sure. But in the mean time, lets all spend some more money we don't have, shall we?

And obviously, this is not only the case in Europe. Look at the USA for instance:

[kenberg]

Indulge me.

If my neighbor owes me money and can't/doesn't pay, I am out some money.

These bonds have been cut to 50% of their original value. I understand that "the bank" lost money. But is there someone somewhere whose net worth is now substantially less than it was, as a direct result of this devaluation? I have this simple minded notion that when money disappears, someone is poorer than he was before it disappeared. Who?

This does not mean I am criticizing the deal. It more means that I don't understand the deal.

[jdeegan]

kenberg, on 2011-October-28, 14:31, said:

Indulge me.

If my neighbor owes me money and can't/doesn't pay, I am out some money.

These bonds have been cut to 50% of their original value. I understand that "the bank" lost money. But is there someone somewhere whose net worth is now substantially less than it was, as a direct result of this devaluation? I have this simple minded notion that when money disappears, someone is poorer than he was before it disappeared. Who?

This does not mean I am criticizing the deal. It more means that I don't understand the deal.

The technical term is "haircut", as I am sure you know. Just who lost and how much is hard to tell from the outside, but at least it was mainly the people who imprudently (probably having been misled by their agents) loaned the Greeks the money in the first place and not the mostly innocent third party tax payers in the various Euro bloc countries.
Imho, a heads I win, tails you lose banking system does not have a very long expected life. Neither does a socialist banking system. Maybe by sticking to the basics, the Euro may have a chance after all.

[kenberg]

Haircut. That's like the Delilah babe did for Samson, right?

Anyway, I hope this works. I believe in fairies. I believe in fairies. Clap your hands if you believe in fairies.

[blackshoe]

The Vatican seems to have produced a pretty astute analysis of the root cause of our current problems, but like the New York Times, I'm not at all sure they've come up with the right solution. Their solution seems like just more of the same — bigger government, bigger and more powerful central banks. Somebody needs to remind them we're in a hole, and we should stop digging!

[kenberg]

Let me ask another really naive question. I get the idea that a possible explanation is that those sneaky Germans are working harder than the rest of us. What will they think of next! But here is the question: Is it possible to find data N and x where N=number of citizens over the age of 21 (no upper limit) and x= total number of hours worked in a week by all citizens over the age of 21. One might draw various conclusion from such data, but knowing x/N for various countries might suggest some policy matters.

Back in the USA, I reflect on the changes over the years. My father joined the full time work force at the age of 13. I finished my Ph.D. when I was 28. Yes I worked before that, quite a bit from fairly young, but not full time year around. I am now retired (sort of) and can statistically expect to live significantly longer than my father.

The point is that we really cannot have everyone either in school preparing for work, working but on an extended vacation, or retired from work drawing a pension. Someone has to actually work.

Not exactly on target with my rant, but related: We also can't have everyone shuffling money and SDRs and all that stuff around. Someone needs to drive a forklift.

Anyway, are the numbers x and N available country by country?

[hotShot]

kenberg, on 2011-October-28, 14:31, said:

These bonds have been cut to 50% of their original value. I understand that "the bank" lost money. But is there someone somewhere whose net worth is now substantially less than it was, as a direct result of this devaluation? I have this simple minded notion that when money disappears, someone is poorer than he was before it disappeared. Who?

This does not mean I am criticizing the deal. It more means that I don't understand the deal.

If I got it right (and I hope I did not) than the banks have loans with a nominal value of 100 that have been traded with 35. The interest rate of these bonds is something like 4-5%.
They will change theses to bonds that have a nominal of 50 and the trading starts at 50. The bond are for 30 Years with an interest rate of 6,5%..

Since they already corrected the bond values from nominal 100 to actual 35 in previous balances, they might even call that a profit.

[Aberlour10]

kenberg, on 2011-October-29, 10:45, said:

Let me ask another really naive question. I get the idea that a possible explanation is that those sneaky Germans are working harder than the rest of us.

They may work harder, but even them happen unbelivable mistakes like this one, its a main story today in Germany.

Christmas comes early for Germany after 55-billion-euro accounting error

The discovery of the mother of all accounting errors at a troubled bank under government protection has made Germany some 55 billion euros richer, the Finance Ministry said late on Friday.The discovery of a whopping accounting error has made Germany instantly 55.5 billon euros ($78.5 billion) richer.

The error was caused by a double booking at the state-owned bad bank, created to handle the toxic assets of bankrupt Hypo Real Estate bank, which was nationalized in 2009.

Freeing up the cash means that German national debt, as a percentage of gross domestic product, dropped from 83.7 to 81.1 percent. The error was caused when accountants subtracted funds, instead of adding them.

[kenberg]

Math is hard, as Barbie has told us.

[mike777]

[quote name='hotShot' timestamp='1319908783' post='585138']
If I got it right (and I hope I did not) than the banks have loans with a nominal value of 100 that have been traded with 35. The interest rate of these bonds is something like 4-5%.
They will change theses to bonds that have a nominal of 50 and the trading starts at 50. The bond are for 30 Years with an interest rate of 6,5%..

----


total wealth remains the same. There is a transfer of wealth The lender is poorer by the default rate (asset decrease), the borrower is richer(liabilites decrease).

NOte here that the loan value(asset and liability) was never marked down to the market value of 35. They were carried in the accounts at 100. Now they are at 50.

It is complicated but some assets need not be carried at market value on the account books.

In practice the borrower could buy the loan (100) at a market price of 35 and book a profit.

[kenberg]

These numbers are not adding up for me. As to the 35 versus 50, I would have expected that to be from the same reason bonds generally do not trade at face value: a. You have to wait for maturity to get the face value and b. you may not get it.
But a bond that would pay 50 in thirty years would not be trading at 35 or anything near it even if there was great confidence in the payout, which there isn't.

Ok, so I do not need to understand those details since I have no plans to buy them. In regard to who takes the hit (3.7B of it anyway), I found the following:
http://technorati.co...sovereign-debt/

Quote

A new debt deal struck between private lenders and European leaders Thursday effectively eliminated the possibility of a Greek default. Banks involved in the negotiations agreed to 'voluntarily' reduce the value of the Greek debt they hold by 50%. According to Greek Prime Minister Papandreou, the deal makes Greece's debt load manageable, but, according to many, it may have disastrous implications for the sovereign debt market.

The problem is that because "the terms governing credit-default swaps on European sovereign bonds imply that a voluntary debt restructuring won't trigger payouts to buyers of protection," those who smartly hedged their investments in Greek sovereign debt by purchasing credit-default swaps will not receive the payments to which they are entitled.

Let's face it, Greece defaulted. However you want to spin the new debt deal, Greece was headed for bankruptcy and the 'voluntary' haircut banks agreed to take on their Greek debt was the result of relentless pressure from German Chancellor Angela Merkel and French president Nicolas Sarkozy. In other words, it wasn't really voluntary. Surely Greece's debtors did not really want to write-down their holdings--no one jumps at the opportunity to take a loss.

On the bright side, the new agreement allowed Europe to side-step a so-called 'credit event' in which a Greek default would have triggered CDS payments and which would theoretically have caused Italy and Spain's borrowing costs to skyrocket. However, the new deal costs CDS holders a total of $3.7 billion in payments they would have received had Greece's default not been classified as a 'voluntary restructuring'. This will likely shake investor's confidence in the reliability of the CDS market.

While many observers would welcome the demise of the credit-default swap (the instrument is widely blamed for much of the damage done during the financial crisis), maintaining CDS credibility is critical for the functioning of the sovereign debt market. If investors believe government intervention will prevent them from receiving payments on credit-default swaps, they may simply choose to avoid buying sovereign debt altogether. In other words, if banks cannot buy reliable protection to insure them against losses on the debt they purchase, they may not purchase the debt in the first place. Worse still, banks may simply dump their holdings of European sovereign debt if they become convinced that government intervention will always negate their CDS payouts by classifying any bankruptcy as a 'voluntary restructuring'.

The debt deal struck by European leaders may have accomplished exactly what it set out to prevent. Instead of propping-up the sovereign debt market, they may have seriously undermined it.

I understand events in mathematics pretty well because I am a mathematician, and it does not surprise me that non-mathematicians have a tough time making sense of the advanced aspects of it. By analogy, it does not amaze me when I find these financial matters to be over my head. As I do here. But I can see how we might hold off on the champagne for a bit. Nonetheless, there was a very real loss and someone had to take the hit (aka the transfer).

[y66]

Annual hours actually worked per worker by country. Source: OECD

[kenberg]

y66, on 2011-October-30, 10:31, said:

Annual hours actually worked per worker by country. Source: OECD

A very interesting source!

At a first reading it appears that the Greeks are working much longer hours than the Germans. But Germany is wealthy enough so that it can misplace 55B or so w/o crashing, while Greece needs every Euro, or even Drachma, that is up for grabs.

How can this be? The data Y produced is for hours per worker, not hours per adult person. This may be part of it. If Greeks retire early then the retiree's lost hours do not, I think, show up in this data (the retiree is not a worker). But this is unlikely to be the whole story. It is at least plausible to suspect that economic and social structure fit into this somehow.

It seems worthwhile to put ideology and easy judgments aside and try to get to the heart of it. I would expect there to be lessons for the USA in such an analysis.

[WellSpyder]

kenberg, on 2011-October-30, 12:20, said:

A very interesting source!

At a first reading it appears that the Greeks are working much longer hours than the Germans. But Germany is wealthy enough so that it can misplace 55B or so w/o crashing, while Greece needs every Euro, or even Drachma, that is up for grabs.

How can this be? The data Y produced is for hours per worker, not hours per adult person. This may be part of it. If Greeks retire early then the retiree's lost hours do not, I think, show up in this data (the retiree is not a worker). But this is unlikely to be the whole story. It is at least plausible to suspect that economic and social structure fit into this somehow.

It seems worthwhile to put ideology and easy judgments aside and try to get to the heart of it. I would expect there to be lessons for the USA in such an analysis.

The ALFS Summary tables from the same source give you data on employment and on the population aged 15-64 so you can work out an employment rate by dividing one by the other. Multiplying the data on hours per worker by the employment rate should give you hours worked per person of working age, which sounds like what you are after. Alternatively, it might be interesting to divide by the whole population not just those of working age.....

[Aberlour10]

kenberg, on 2011-October-30, 12:20, said:

<br />A very interesting source!
At a first reading it appears that the Greeks are working much longer hours than the Germans.

This alone has not so much to say. Look at the trade balance of the both countries.
Also the productivness benchmarks. And not at least the development of the real wages. While it continously sank in Germany in the last 15 years....it grew, grew and grew in Greece.